MANILA BANKING CORPORATION, PETITIONER, VS. COURT OF APPEALS AND LUZON BROK­ERAGE CORPORATION, RESPONDENTS.

The sufficiency of a complaint for injunction is what is chiefly involved
in these appellate proceedings.  The
Court of Appeals, reversing the Trial Court, held that the complaint does set
out a cause of action.  It is that
holding that is now challenged in this Court by the petitioner, Manila Banking
Corporation.

The complaint was filed in the Court of First Instance of Surigao del Norte by Luzon Brokerage Corporation against
said bank and two (2) others, the Pacific Copra Export Co., Inc. (PACOCO), and
the Provincial Sheriff of Surigao del
Norte.^[1]
Basically, it alleged the following facts, to wit:

 1.  Luzon Brokerage Corporation — hereafter,
simply LUZON — entered into (a) a “Field Warehouse Storage
Agreement” with PACOCO to operate warehouses in Surigao,
Surigao del Norte for Philippine copra in bags and/or
in bulk,^[2]
and (b) some three and a half years later,^[3]
a lease of the latter’s two warehouses for the purpose of depositing copra
therein.

2.  Pursuant to the
agreements, LUZON received from PACOCO for deposit in
said warehouses 150 long tons of copra
resecada valued at P84,000.00, at least, in
connection with which LUZON issued the following
warehouse receipt, viz.:

“FWR No. 978 dated July 29, 1964 for 150 long tons copra resecada “for the account of and to be delivered
without surrender of this warehouse receipt upon written order of Pacific
Banking Corporation, Manila, for Wells Fargo Bank, San Francisco, California,
Pledge for Paxsmo Inc., San Francisco, California,
covering Letter of Credit No. 14549.”

3.  Some two months later,
Manila Banking Corporation — hereafter simply MANILABANK — addressed a formal
request to the Provincial Sheriff of Surigao del Norte to extra­judicially sell
the copra above described at public auction.^[4]

4.  That request was made
without prior satisfaction of LUZON‘s warehouseman’s lien, the surrender of the warehouse
receipt, or presentation of a “written order” from the entities
mentioned in said receipt.

Alleging further that the extra-judicial
sale was violative of LUZON‘s rights, and would cause it injustice and irreparable
injury, the complaint prayed that:

“(a)  a writ of
preliminary injunction be issued ex parte restraining
the defendants, their agents, representatives or deputies from selling the 150
long tons of copra in the two warehouses of PACOCO leased to plaintiff * * and
from molesting said plaintiff in its possession thereof;

(b)  after
due proceeding, defendants be perpetually enjoined from committing said acts;

(c)  defendants
(MANILABANK and PACOCO) be sentenced to pay plaintiff not less than P6,000.00
by way of attorney’s fees and other necessary expenses of litigation;

(d)  (said)
defendants ** taxed the costs of suit; (and)

* * (plaintiff) be
granted such other equitable remedies as may be deemed just in the
premises.”

The Trial Court issued a temporary restraining order and set the
application for preliminary injunction for hearing.^[5]
MANILABANK filed an opposition to the injunction application.^[6]
LUZON replied.^[7]
The Court then issued an order requiring LUZON,
MANILABANK, and another claimant to the copra, a certain Ong
Hing Lian, “to submit
simultaneous memoranda” on the issue. 
In the same Order,^[8]
the Court directed the following:

“As the subject matter of this case is copra, which is
fungible, and copra will deteriorate in the passing of time, in order to save
this from deterioration and ultimate loss, to the prejudice of the party or
parties who may be found to be entitled to the same, the Court hereby directs
the Provincial Sheriff to cause notice to be published again according to law
for the sale at public auction of the copra in question, to the highest and
best bidder within five days from the time that the notices are published or
posted according to the requirements of the law.

The Provincial Sheriff shall hold in his custody all the proceeds
of the sale of the copra until the court will have decided to whom to award the
same.”

The copra was accordingly sold at public auction for P78,470.11, which amount was deposited with MANILABANK in the
name of the Provincial Sheriff of Surigao del Norte,
subject to the orders of the Trial Court.^[9]

Memoranda were also submitted by MANILABANK AND LUZON as
required.  MANILABANK’s
memorandum contained a motion to dismiss the complaint on the ground of failure
to state a cause of action.^[10]
LUZON‘s
memorandum, as might be expected, included an opposition to the motion.^[11]

Thereafter, the Court promulgated an Order dismissing the
complaint with costs against plaintiff LUZON, declaring
MANILABANK entitled to all the balance of the proceeds of the copra in the
amount of P78,062.71 and directing the Sheriff to
deliver the same to MANILABANK.^[12]
The Court cited the following reasons for the dismissal of the action:

1)  a
“re-reading of the complaint –

* * does not show that
the plaintiff seeks to recover anything from the defendant Pacific Copra Export
Co., Inc., but only to prevent the defendant, the Manila Banking Corporation
and the Provincial Sheriff from doing something.  It only avers that it has superior liens and
that it is entitled to the reliefs prayed for it only
for the issuance of a permanent injunction and for the defendants to pay the
plaintiff attorney’s fees in the amount of P6,000.00.  * * * (Moreover) under the New Rules of Court, injunction can no longer be
maintained as a main action but only as ancillary or in aid to a main action.”

2)  to
follow LUZON‘s theory to its logical conclusion would mean keeping the
copra indefinitely in the bodega of PACOCO, ultimately resulting in its
“loss by deterioration,” to the prejudice of the parties;

3)  even if the action were
proper, LUZON could not be awarded the copra in question because, according to
its Field house Warehouse Receipt No. 978, the copra it was claiming was
deposited in Warehouse No. 8, whereas that mortgaged to MANILABANK was in
bodegas Numbered 1 and 2 of PACOCO; furthermore, while the chattel mortgage of
the copra in favor of MANILABANK had been duly registered, the warehouse
storage agreement relied on by LUZON had not been so registered; and

4)  the
copra had already been sold at public auction, and the proceeds deposited with
MANILABANK subject to the Court’s orders.

LUZON appealed to the Court of
Appeals.  The Court set aside said order
of dismissal, declaring it to be “erroneous,” and remanded the case
“to the lower court for further proceedings and trial on the merits.”
In its Decision,^[13]
the Court of Appeals said:

1)  “There is still a
main action of injunction * *
(which) should not be confused with the provisional remedy of preliminary
injunction.”

2)  “The complaint
states a sufficient cause of action * * (which is set out in its paragraphs 3
to 6, inclusive; i.e.,) the right to keep the copra in question in its custody
until its lien as a depository has been satisfied and to prevent the defendants
to sell said copra at public auction without satisfying the plaintiff’s lien
thereon.”

MANILABANK appealed to this Court by certiorari.  Here it raises the “principal question
of law ** (of) whether or not an injunction
can be issued against consummated acts;” and “as a corollary, whether
or not a case that has indubitably become moot and academic can still be tried
by a court.”^[14]

The Court of Appeals is of course correct in so far as it opines
that in this jurisdiction, and under the present state of the law, there is
“still a main action of injunction,” which prays for judgment
embodying a final injunction and which is distinct from, and
“should not be confused with the provisional remedy of preliminary injunction,” the sole object of which is to preserve the status quo until the merits can be heard.^[15]

Rule 58 of the Rules of Court provides for both types of
remedies:  a preliminary and a final
injunction.  Section 1 of the Rule
defines a preliminary injunction as –

“* * an order granted at any stage of an
action prior to the final judgment, requiring a person to refrain from a
particular act * * (or) the performance of a particular act, in which (latter)
case it shall be known as a preliminary mandatory injunction.”

Section 10 of the same Rule, on the other
hand, treats of a final injunction.^[16]
It reads as follows:

” * * If upon the trial of the action
it appears that the plaintiff is entitled to have the act complained of
permanently enjoined, the court shall grant a final injunction perpetually
restraining the defendant from the commission or continuance of the act or
confirming the preliminary mandatory injunction.”

Furthermore, Section 4, Rule 39, also adverted to by the
Appellate Tribunal, deals inter alia with
“an action for injunction,” and decrees that the judgment therein
“shall not be stayed after its rendition and before an appeal is taken or
during the pendency of an appeal.”

An action for injunction, therefore, is as it has always been, a recognized remedy in this country.  It is, as above intimated, a suit which has for its purpose the
enjoinment of the defendant, perpetually or for a particular time, from the
commission or continuance of a specific act, or his compulsion to continue
performance of a particular act.  It has
an independent existence.  It is similar
to the special civil action of prohibition under Rule 65, except that the
latter, in common with other special civil actions, deals with special matters
requiring a special procedure,^[17]
i.e., it is concerned with public officers or entities performing public
duties:  tribunals, corporations, boards,
or persons exercising functions judicial
or ministerial,^[18]
whereas the former, an ordinary suit,^[19] generally involves acts and
transactions of private individuals.  The
action for injunction is distinct from the ancillary remedy of
preliminary injunction which cannot exist except only as part or an incident of
an independent action or proceeding. 
And, of course, in an action of injunction, the auxiliary
remedy of a preliminary injunction, prohibitory or mandatory, may issue.

Ollendorf v. Abrahamson, decided by this Court as early as in 1918,^[20] is illustrative of this form of action.  The case involved an “obligation imposed
upon defendant by the particular clause of his contract * * (which was) negative
in character” (i.e., “not to engage in a similar or competitive
business to that of the plaintiff” anywhere within the Philippine Islands for a
period of five years).  The Court
observed that the traditional mode of enforcing obligations of this sort was by
an injunction suit.

” * * .  Unless
defendant voluntarily complies with his undertaking there is no way by which
the contract can be enforced except by the injunctive power of judicial
process.  Such negative obligations have
long been enforced by the courts in this manner.  As stated by High in his well known work on
Injunctions (Vol. 2, pp. 877-878):

‘The remedy by injunction to prevent the violation of negative
agreements, or contracts not to do a particular thing, is closely akin to the
remedy by way of specific performance of agreements of an affirmative
nature.  In both cases the object is
substantially one and the same, and by enjoining the violation of a negative
agreement the court of equity in effect decrees its specific performance.  (Lumley vs. Wagner,
1 DeGex, M. & G., 604).’

Where by the terms of a contract imposing a positive obligation the
obligor is entitled to a specific performance, it will not avail the defendant
to show that plaintiff will suffer no pecuniary damage if the contract is not
performed.  Upon like reason, when the
undertaking is negative in character and defendant is violating the obligation
imposed upon him the court may interfere without requiring proof of actual
damage.  (High on Injunctions, par. 1135,
citing Dickenson vs. Grand Junction Canal Co., 15 Beav., 270).”

As well established is the rule that an action for permanent
injunction should be dismissed when it appears in the trial or otherwise that
the acts, to restrain which the action was begun, have been accomplished or
fully executed.^[21]
It is this rule that infuses merit into the petition at bar, impelling issuance
of the writ thereby prayed for.

The acts sought to be restrained by LUZON‘s complaint
have already been accomplished.  What the
complaint sought essentially was to perpetually stop the Provincial Sheriff of Surigao del Norte and
his co-defendants, and “their agents, representatives or deputies from
selling the 150 long tons of
copra in the two warehouses of PACOCO leased to plaintiff (LUZON) * * and from
molesting said plaintiff in its possession thereof.” This, on the theory
that the extra-judicial foreclosure sale was being attempted without prior
satisfaction of LUZON’s warehouseman’s lien, the
surrender of the warehouse receipt, or presentation of a “written
order” from the entities mentioned in said receipt.

But the undisputed fact is that LUZON had
long since ceased to have possession of the copra resecada, and the mortgage sale thereof has
already been consummated.  It is
obviously no longer possible to grant it
the relief it was seeking against MANILABANK, i.e., the permanent
restraint of the mortgage sale of the copra, and of any interference with its
possession thereof.

Nor may the complaint be deemed as alternatively praying for
payment of warehouse fees for not only does it fail to set out a prayer for the
payment of said fees, but more importantly, there is nothing in the body of the
complaint particularly setting forth a claim therefor.  The general prayer “for such other reliefs as may be just and proper” is meaningless in
this context.

In any event, MANILABANK may not be deemed a debtor of LUZON
as far as warehouse fees for the storage of copra deposited by PACOCO are
concerned.  While LUZON
had a right of action against PACOCO to recover fees for the storage of the
copra deposited with it by the latter, it had no such right against MANILABANK. 
The only right that LUZON had vis
a vis MANILABANK
(or any other claimant of the deposited copra, aside from PACOCO) consisted of
the so-called warehouseman’s lien, i.e., the right to retain possession of the
copra and refuse to release it to the claimant except only upon surrender of
the warehouse receipt and payment of the storage charges.  But that lien, being possessory
in nature, was lost when LUZON gave
up possession of the copra;^[22] and when that happened, LUZON ceased to have any right whatever against
MANILABANK with respect to the copra. 
Certainly, as regards the deposit of the copra by PACOCO with LUZON, the latter had and has no right of action
against MANILABANK for
recovery of the storage charges therefor.  Its lien having been lost, LUZON could look only to its debtor, PACOCO, for
payment of said storage charges.^[23]

WHEREFORE, the challenged Decision of the Court of Appeals
of February 28, 1977 is
REVERSED, and the Trial Court’s Order dated November 25, 1964 is REINSTATED AND AFFIRMED, with costs
against private respondent.

Cruz, Gancayco, Griño-Aquino,
and Medialdea,
JJ., concur.

^[1]
It was filed on Oct. 20, 1964,
and was docketed as Civil Case No. 1636

^[2]
The agreement was entered into on December
14, 1956

^[3]
On July 29, 1960

^[4]
The copra was mortgaged to MANILABANK as security for an indebtedness of P200,000.00; the deed of chattel mortgage was duly registered
with the Register of Deeds of Surigao del Norte.  Record on Appeal (Rollo,
p. 29), pp. 11-12.

^[5]
Rollo, p. 29: 
Record on Appeal, pp. 11-13

^[6]
Id., pp. 14-26

^[7]
Id., pp. 27-41

^[8]
Id., pp. 42-44

^[9]
Id., pp. 74-75, 79

^[10]
Id., pp. 47-60

^[11]
Id., pp. 61-73

^[12]
Id., pp. 79-85.  The order is dated November 25, 1964

^[13]
Rendered on Feb. 28, 1977,
Fernandez, J., ponente, and
Bautista and Alampay, JJ., concurring.  Rollo, pp. 31 et seq.

^[14]
Rollo, p. 21

^[15]
Redulfa v. Alfonso, 76 Phil. 225, citing Fredericks
v. Huber, 180 Pa. 572; 37 Atl. 90.

^[16]
The Rules of Court of 1940 also treated of a preliminary and a final injunction
(Secs. 1 and 10, Rule 60).

^[17]
See Moran, Comments on the Rules, 1980 ed., Vol. 3, p. 141

^[18]
Sec. 2, Rule 65, Rules of Court

^[19]
See Sec. 1, Rule 2

^[20]
38 Phil. 585, 593-594.  An even earlier
case, Gilchrist v. Cuddy, 29 Phil. 542 (1915), sanctioned the rule that
a “permanent injunction” was the remedy against ”malicious
interference (by strangers) with lawful and valid contracts.” Rustia v. Franco, 41 Phil. 280 (1920) also
held a permanent injunction to be “a perfectly legitimate remedy to
protect the owner of land, being in possession, from illegitimate acts of
repeated intrusion by a stranger, as where a person who has no right enteres from time to time to cut wood or carry off other
products.” See, also, Barrameda v. Gontang, 19 SCRA 387

^[21]
Reyes. v. Harty, 21 Phil. 422; Larap Labor Union v. Victoriano,
97 Phil. 435, 439 citing Reyes v. Harty, supra)
(1955), Remonte v. Bonto,
16 SCRA 257 (1966); Tomulo v. Yñiquez, G.R. No. 71908, Feb. 4, 1986;

^[22]
Under SEC. 29, of Act No. 2137 (The Warehouse Receipts Law), a warehouseman
loses his lien upon goods inter alia by
“surrendering possession thereof” “without requiring payment of
his lien because a warehouseman’s lien is possessory
in nature (Agbayani, Commercial Laws of the
Philippines, 1976 ed., Vol. 1, p. 471).

^[23]
SEE Secs. 27, 28, 32, Act No. 2137